Milford Industries Pty Ltd

[2020] FWCA 1949

[2020] FWCA 1949

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
Section 225 - Application for termination of an enterprise agreement after its nominal expiry date

Milford Industries Pty Ltd
(AG2020/693)

MILFORD INDUSTRIES PTY LTD ENTERPRISE AGREEMENT 2015

Manufacturing and associated industries
DEPUTY PRESIDENT ANDERSON	ADELAIDE, 15 APRIL 2020

Application for termination of the Milford Industries Pty Ltd Enterprise Agreement 2015

[1] On 13 March 2020, Milford Industries Pty Ltd (Milford or the applicant employer) made an application to terminate the Milford Industries Pty Ltd Enterprise Agreement 2015 (the Agreement) under section 225 of the Fair Work Act 2009 (the FW Act).

[2] I issued directions on 18 March 2020. These directions required Milford industries to make the documents lodged as part of this application, my Directions, and the associated Notice of Listing, available to all employees covered by the Agreement. I required Milford to file a statutory declaration confirming this had occurred. A statutory declaration to this effect was provided on 15 April 2020.

[3] Notice of this hearing was provided to employees of Milford. No employee organisation is a party to the Agreement. No employee interested in this application contacted my Chambers seeking to be heard on the application. None appeared at the hearing.

[4] This matter was the subject of a hearing on 15 April 2020 at which time I heard from Ms Krollig of Business SA and Mr Michael Rees, a director of the applicant employer.

[5] The applicant employer is entitled to apply for the termination of the Agreement pursuant to section 225 of the FW Act.

[6] Section 226 of the FW Act provides as follows:

“226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; and

(b) the FWC considers that it is appropriate to terminate the agreement taking into account all the circumstances including:

(i) the views of the employees, each employer, and each employee organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations including the likely effect that the termination will have on each of them.”

[7] The Agreement is a single enterprise agreement. It was approved by the Fair Work Commission (the Commission) on 23 April 2015 1. It was approved to operate from 1 May 2015 with a nominal expiry date of 30 April 2019. It has now passed its nominal expiry date. The ground on which the application is made is that market conditions have significantly changed since the Agreement’s approval and that terms of conditions of employment should revert to the applicable award (the Manufacturing and Associated Industries and Occupations Award 2010). Milford submitted that reverting to the award would give the company greater flexibility to respond to changed market conditions and that it would not be contrary to the public interest to revert as such.

[8] During the hearing it was put to me by Mr Rees that the applicant employer had discussions with groups of employees regarding the business’ operations and progress toward the Agreement’s proposed termination. Mr Rees also put to me that employees had been notified about the impact of the Agreement’s proposed termination and that, by way of undertaking by Milford, the rates of pay of existing employees would remain unchanged should the application be granted.

[9] I have considered the information provided in the application and by Mr Rees pursuant to section 225 of the FW Act. This includes a statutory declaration of Mr Rees dated 12 March 2020 and an undertaking provided on behalf of Milford dated 8 April 2020. I note that the 12 March 2020 statutory declaration of Mr Rees says as follows:

“There is nothing inherently inconsistent with the termination of the Milford Industries Enterprise Agreement and the capacity for the parties, if they wish, to commence bargaining in good faith in the future.

In addition, it cannot be expected that the Terms & Conditions of the Agreement will continue unaltered in perpetuity in light that the Agreement passed its nominal expiry date 30 April 2019. This Agreement has well and truly passed its nominal expiry date and the Fair Work Act contemplates the terms and conditions of employment may be altered by making a new agreement or by terminating the existing agreement.

The employee's terms and Conditions will continue to be in line with the Terms and Conditions provided under the Manufacturing and Associated Industries and Occupations Award [MA0000l0], and the National Employment Standards under the Fair Work Act.

The employees' current hourly rates of pay will remain unchanged, currently providing the employees with above award payments.

The employee's classification levels will be defined and will, at all times be in line with the structure provided under Schedule B - Classification Structure and Definitions of the Manufacturing and Associated Industries and Occupations ·Award [MA0000l0).”

[10] I note the undertaking provided is as follows:

“Milford employees are currently paid a Rate of Pay that is calculated upon, and equivalent to, the Award Classification Level above the actual grade of work being completed by the individual employee respectively.

Milford Industries undertake to maintain each existing employees' current hourly rate such that the employee's current Hourly Rate of Pay will not be reduced. Milford Industries will ensure that the employees' Hourly Rate of pay will at all times be in line with the applicable classification level under the Manufacturing and Associated Industries & Occupations Award, including any future federal wage increases.”

[11] I have considered the information provided in the application and by Mr Rees pursuant to sections 225 and 226 of the FW Act. This includes the statutory declarations and the undertaking noted above. I have in particular considered the circumstances of employees, both existing and those who may be employed in the future.

[12] The undertaking provided acts as a savings provision for existing rates of pay for current employees. Employees who may in the future be employed are not covered by the undertaking. It is possible that such persons may be employed at a minimum hourly rate which is compliant with the applicable award but at a lesser rate than that in the Agreement. I have taken this into account under section 226(b)(ii) as a potential adverse consequence for future employees. Mitigating somewhat against this consideration is the potential advantage to job security for all employees from the additional flexibility in rostering and in applying award rates of pay for future employees which the applicant employer may accrue from reverting to the applicable award.

[13] Taking all of the circumstances and evidence into account, I am satisfied as to each of the matters contained in section 226 of the FW Act. It is not contrary to the public interest to terminate the Agreement. It is appropriate to terminate the Agreement. Accordingly, the Agreement is terminated.

[14] The termination will come into effect from 11.59pm on 15 April 2020. An Order to this effect will be issued.

DEPUTY PRESIDENT

 1   [2015] FWCA 2740

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